This decision was featured one hour after the closing of European markets, but affected Wall Street an the Euro as well. The risk factor in Spain continued to grow and reached 160 basic points. The treasure of Spain highlighted that this rating is still being high.

Fitch returned to trouble Spanish market, specially when looking to the beginning of the next week.

Lower growth

“the reduction of Fitch reflects the valuation on the adjustment process to a lower deficit, and the valuation of private industry, that will reduce the growth of Spanish economy in the mid-run”.

Fitch launched a message of tranquility, when stating that the profile of national debt in Spain continues being very strong, hold by a diversified economy and a “solid” financial sector.

Labor reform and savings banks.

But Fitch seems worried in the mid-run “although the national debt and the associated interests rates remain in AAA, Fitch anticipates that the process of economic adjustment will be longer and more difficult than for other economies with the highest credit rating, for that reason, the agency lowered the credit rating of Spain to AA+”.

The report of Fitch, points repeatedly, the “process of economic adjustment”. The company added other issue spots that will also participate in that process. In the middle of the restructuring of savings banks and the debate on the labor reform will difficult the way to adjustment, specially the trouble derived from the real estate boom

More debt although the cuts

New measures approved by the government, that include reductions of civil servant’s salaries and the freeze of pensions, will not prevent the levels of national debt to increase.

According Fitch , “although the big commitment to reduce deficit- as showed by the measures of government to reduce salaries of civil servants by 5%, the national debt could reach 78% of GDP in 2013, in contrast of the 40% before the crisis”.

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According The Independent on Sunday, this figure, is three times higher than the offered in a beginning by the finance ministry , George Osborne, and is a indicative that The United Kingdom needs drastic measures in front of the serious problem with the national debt.

According the newspaper, The size of the new tax, points that the government is planning announce in his first budget, next June 22th, an increase of the VAT from the current 17.5% to a 19 or 20%.

Meanwhile, other newspaper, “The Daily Telegraph”, affirms have seen the draft of the so called “speech of the Queen”, program of the new Government, that will read the Queen in the aperture of the new parliament, this Tuesday , and that declares as a first priority “reduce deficit and resume Economic Growth”

“My Government will try to build a new strong and just society reforming public services and fomenting individual and social responsibility”, will say the Queen in this speech.

The conservatives, declared his intention to delete a lot of the hundreds of assessment organisms, regional development agencies, and other entities created by previous laborist governments, and that meanwhile, are having a maintenance costs of more than 90.000 millions of pounds.

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During all this year, Greece has only made a bond emission. It was in mid January, just before the fears of the market on the Greek National Debt and the high fiscal deficit of Greece , the the country pulled €8000 million at 5 years.

The objective, is spread €5000 million in bonds at 10 years. The analysts expected that the price could be around 310 basic points over midswap, the reference index of that kind of emissions.

The first figures from the demand, have allowed to reduce the expectations about the final price of new Greek National Debt emitted, to 300 basic points over midswap. According sources from the Greek government, the emission of Greek National Debt was closed in just two hours, when reaching €15.500 million,three times more than the amount expected. The interest rate of these bonds could be around 6,4% according Reuters.

This amount of demand, softened the peak reached by the interest rate of Greek National Debt.

The Greek National Debt needs to be refinanced between April and May by a value near €20.000 million, and by €53.000 million during the whole year.

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Speaking in the French Radio Europe Ladreit pointed that the situation in these three countries supposes a new form of financial crisis, highlighted that “the important is the credibility they could suggest”.

The economist pointed that both France and Germany aren’t threatened with a national debt issue, because they dispose of credibility for the investors. “In France and Germany we are so lucky that we have 2 pilots in the airplane” said.

We shouldn’t retreat the emergency plans in order to contain national debt

Furthermore, said that the financial crisis “hasn’t still totally ended”. “New issues appear day after day, month after month”, pointed using the example of the Bankrupt in Dubai World two months ago. So, opted for keeping the stimulus plans to boost the economy rather than trying to contain the national debt. “Its essential to keep the stimulus plans in order to boost the economy, because the growth rates for 2010 are still very weak”,said.

About the case of Greek national debt, pointed that “there are a lot of things that aren’t normal” in the Greek economy, a country that never followed European directives about control of National Debt. However highlighted that “it’s imperative to help Greece”, something that the Maastricht treaty “does not allow to do at the moment”.

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The members From the International Monetary Fund will remain in Athens around a week since tomorrow, when they are scheduled to arrive. However, the organization presided by Dominique Strauss-Kahn didn’t speak about a possible financial aid to Greece.

This team will analyze “possibilities for the International Monetary fund to dispatch technical assistance, about the pension reformation, tributary policy and administration, and budget administration” according the spokesman of the International Monetary Fund informed.

The Economic plans of Greece are being questioned and the government of the country wants to convince the European Investors and the Stranger Investors that they are able to reduce deficit and national debt. Nowadays, Greek public accounts are the worst in all the European Union and the fear of a worse crisis is increasing.

Greece treasures a big national debt

Last year, the Greek national debt close with a deficit equal to 12,7% of the Gross Domestic Product (GDP), what increased his national debt to 113% of GDP. Furthermore, the fear of a possible bankruptcy of Greek accounts is still alive, and specially since the recent crisis of Dubai.

The International financial risk qualification agencies itself, trimmed the rating of Greece, making the Greek national debt more expensive.

At the same time a spokesman of the International Monetary Fund visited the Arab Emirates (AEU),to get informed about the current situation of the economy in the country. The results of the report will be delivered to the Executive Committee from the International Monetary Fund, that will analyze them next weeks.

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According the newspaper ‘Der Spiegel’, the department estimates that, given the level of German National Debt, the beginning of tax reductions should be postponed by a year or two.

In his coalition agreement, christian-democraths (CDU), liberals)FDP) and bavarian socialchristians (CSU) accorded in October a wide fiscal reformation aimed to reduce the tax charge by €24000 million yearly, beginning from 2011. Those plans have been considered impossible because of several economic reasons.

The last January 1st came into account the first law of fiscal reduction in the second legislature of Merkel, that with the title of Law for the Growth Acceleration and a volume of €8400 million, wants to boost the consumption of families and the growth of small companies.

Among other measures, the law regards increase deductions for families with sons from the current €6024 to €7008, independently from the income level of the contributors.

Furthermore, is planning to increase the subsides per soon by €24/month to 184, to 190 to the third, and until 215 for the fourth.

Also is considering improvements in the successions tax. Corporate inheritances to brothers and cousins, will receive a fiscal consideration similar as if they were sons.

The catering will receive the benefits of the reduced VAT and will only pay 7% instead of 19%

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The incoming national debt disaster caused heavy selling of Greek Stocks and bonds and the shares on the Athens stock exchange fell more than 6 per cent.

For first time in 10 years, a leading rating agency, Fitch, has given to Greece the BBB plus grade with negative Outlook, that is lower than A.

Maybe this building will be for sale to pay Greek national debt.

The Greek Finance Minister,George Papaconstantinou, said that the downgrade reflected Greece’s “mounting credibility gap in recent years and an exceptionally difficult fiscal situation” faced by the new Socialist government, which took over in October.

the other main ratings agencies,Moody’s and Standard & Poor’s, have also warned Greece that they can also downgrade ratings on Greek national debt, that is forecast to rise to 125 per cent of gross domestic product next year.

Concern focuses on whether Greece will be able to contain its national debt by implementing a new revenue-raising measures swiftly enough to cut the deficit from 12.7 per cent to 9.1 per cent of GDP next year in line with budget projections.

Although the ECB will keep the emergency rules next year, Greece must be careful with his national debt and reduce its deficit soon. Although the relaxed ECB rules allow for collateral of bonds with ratings of BBB minus, Greece could experience problems in raise bonds, and this may lead to more interests that could at the same time, increase the Greek national debt still more.

About this national debt and solvency issue, Goldman Sachs said: “Unless the ECB fiddles with its rules before the end of next year, then from the beginning of 2011, Greek sovereign bonds will no longer be eligible for ECB collateral.”

Today we also have known, that Barack Obama will use $200bn from the remaining of the emergency packages. This time instead of paying the Banks the money will help the small companies that are employing 2/3 of the population. The republicans believe that this money should be used to reduce the national debt, i will explain it tomorrow.

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